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How to Sell a Hotel

Investors are looking to buy hotels in Canada. This could be a great time for you sell!

The Canadian hotel industry is doing well and investors from all over the world have been paying attention.

The occupancy rates have been high and room rates have been on the up, so this may be the ideal time for you to put your hotel on the market and get a lot of interest.

Industry overview

A rising GDP coupled with a strong economy has created the perfect setting for the hotel industry. 2017 was a record-setting year in terms of hotel investment and forecasts suggest that this is going to continue into 2018.

Investors from outside Canada's borders have turned their attention towards its hotel industry as most people seem confident in Canada remaining an attractive place to travel to and do business in.

Toronto is the most popular hotel investment but this is closely followed by Vancouver. 

industry-review

How to value your hotel

A hotel accumulates value in vastly different ways and so it can be challenging to decide on a specific price tag when you are wanting to sell your business.

If you have been updating the interior of your hotel periodically in order to keep up with changing trends, then the value of your business will be more than someone who hasn’t changed the designs since opening.

The value that you finally settle on has to include the value of your assets and this will include all assets that are being included in the sale. In order to do this correctly, you will need to have an extensive inventory that considers the value of linen, furniture and other soft assets.

The value of your hotel will also be dependent on the room prices and what your occupancy rates are. You will then need to consider your possible future earnings.

When you are trying to value your hotel, it may be necessary to get the help of a lawyer or accountant or any professional who has experience in valuing hotels.

If you are able to find a business broker that you trust and that has experience with selling hotels, they should be able to advise you as to the best way to value your business and help you determine what price you should put your business on the market for.

value hotel

Preparing your hotel for sale

Before you try to sell your hotel, you should make sure that you have fixed general wear and tear that has happened over the years that you have let be neglected. You should also make sure that your hotel is up to code in every way.

Your finances need to be organised prior to finding a buyer. There should be a clear record of costs and income and room occupancies from the last three or so years. The earlier you begin to prepare your business for the sale the better as you will then be able to keep things in order as you go rather than trying to go back and fix previous mistakes.

Without a clear record of your finances, there is no way of getting a true valuation for your business. It can seem counter-intuitive to begin thinking about your exit strategy from the moment you start your business, however, this is the way that you will guarantee that you can cash in on your investment.

It will be important to many potential buyers that you have a good management team on your staff. The type of staff that you have working in management positions at the time of the sale will make a huge difference to the transition between owners. 

The way to keep your management team up to scratch is to invest in their training and development. Send your employees on courses to improve their skills and promote the staff members that you see potential in.

Having a well run and desirable hotel for your guests will be something that will entice buyers to pay a higher price for your business. The more customers are will to pay, the greater the value your hotel will have. Consider adding services to your business that will increase its appeal to guests.

Is there fast wifi in all the rooms? Do you offer your guests a concierge service? Is your bedding at optimum standards? Continually upgrading what is on offer is the best away to avoid the situation of needed a large cash investment right before you put your business on the market.

prepare your hotel

Marketing your hotel to buyers

There are a lot of different ways that you can market your hotel. The sales process can be a long and arduous task and the way that you want the sale to be handled will influence the type of broker you use or whether you decide to use one.

Make sure that, if you do use a broker, you choose one that has specialised in the hotel industry. It will make a big difference to the sale of your hotel if you find someone who you can trust who has connections and a good reputation. 

The options for marketing your hotel, though, are anything but restricted as you have the option to advertise it online, in print media or through word of mouth. 

Whichever way it is that you decide to go about finding a buyer, make sure that you have found the way that works best for you and that will get you the right price for your hotel.



Anthea Taylor

About the author

Anthea Taylor is Content Producer at Dynamis and writes for all titles in the Dynamis stable including BusinessesForSale.com, FranchiseSales.com and PropertySales.com as well as other industry publications.

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